The company released its 2024 quarterly report: 2024Q1 achieved revenue of 5.944 billion yuan, +24.62% year-on-year, net profit of 822 million yuan, +38.11% year-on-year, net profit after deducting non-return to mother of 791 million yuan, and +40.68% year-on-year (all compared after base adjustments). 2024Q1 gross margin was 28.65%, net margin after deduction 13.31%.
The increase in revenue and profit was mainly due to increased gypsum board sales, price increases, and merger and acquisition contributions (as reported by Gabrielle on February 29, 2024).
Gypsum board price increases in sync with cost reduction, and the increase in high-end share continues to drive the 2024Q1 company's gross margin of 28.65%, +1.69pct year over year. We judge that the main reason for the year-on-year improvement in gross margin is ① cost price dividend (coal price falls year on year); ② in the product structure, the share of high-end products with strong profitability is expected to increase steadily. With November 4, 2023 (according to the price increase letter), Taishan's full range of gypsum board increased in price by 0.2 yuan/square meter, and on February 26, 2024 (according to the price increase letter), Taishan's full range of gypsum board increased by 0.3 yuan/square meter and non-Taishan's price increase by 0.2 yuan/square meter. It is expected that gross margin will benefit from a steady increase in price.
On the cost side, the cost rate for the first quarter was 13.43%, +0.24pct year on year, and the sales expense rate/management fee rate/R&D expense ratio were 4.94%, 4.67%, 3.57%, and 0.24%, respectively, +0.57pct, -0.49pct, and -0.17pct. Among them, sales expenses increased by 40.87% year-on-year mainly due to increased R&D investment and mergers and acquisitions.
In addition, other revenue of nearly 47 million was a sharp increase of 226% year over year, mainly because the company enjoyed the value-added tax credit policy for advanced manufacturing enterprises. Investment income of 38 million was a sharp increase of 95% year over year, mainly due to the increase in the company's wealth management income.
Operating cash flow is steady, and the balance ratio remains healthy
2024Q1's net operating cash flow was -026 million yuan, with an outflow of 300 million yuan in the same period last year. Cash received from sales of goods and services increased by 600 million dollars due mainly to a significant increase in revenue, as well as a 43% increase in cash received from other operating activities during the current period. Outflows decreased year-on-year, such as a 39% reduction in various taxes paid.
The pay-to-cash ratio is 0.68, which is related to seasonality and the impact of mergers and acquisitions.
The balance ratio at the end of the period was 27.9%, a slight increase. Monetary capital at the end of the period was 1,463 billion, and transactional financial assets were 1,643 billion yuan. Due to operating characteristics, accounts receivable and notes account for 86% of revenue, it is expected to drop to about 10% by the end of the year. Goodwill increased substantially to 2.4 billion as a result of mergers and acquisitions. Short-term loans of $637 million, current liabilities due within one year of $1.8 billion (reclassification of long-term loans).
Investment suggestions: We continue to be optimistic about the company ① the “two wings in one” strategy is progressing steadily, and paint assets (Gabrielle & Lighthouse) are being integrated into the system at an accelerated pace; ② the transformation of gypsum board into “consumer goods” is accelerating; ③ waterproof assets are gradually making a positive contribution; ④ is booming overseas. We predict that in 2024-2026, the company's net profit to mother will be 43.9 billion, 62.0, and 6.52 billion yuan, respectively. The current price corresponds to PE of 12, 8, and 8 times, maintaining the “recommended” rating.
Risk warning: Risk of infrastructure projects and real estate policies falling short of expectations, risk of fluctuations in raw material prices.